Revelstoke city staff have presented council with a 15 year financial plan which includes the draft budget for 2019 that could see property taxes increase between five and 11 per cent next year.
The core budget, which maintains the current services that the city provides, requires a five per cent increase according to Tania McCabe, director of finance for the city.
However each department also puts in requests that would increase the level of service provided and, if approved by council, could further increase taxes another six per cent.
One example is the addition of a Communications and Engagement Advisor, which would increase taxes by 0.9 per cent.
“This budget is based on the service levels established by the previous council,” said McCabe, at last weeks Special Committee of the Whole meeting.
Next year’s budget will be based on the strategic objectives created by the new council.
This proposed increase comes after last years 4.9 per cent tax increase for residential properties, a 4.5 per cent increase for major and minor industry, a 3.4 per cent increase to businesses, a 4.5 per cent increase to recreational properties and a 4.5 per cent increase to farms.
Though McCabe is predicting revenue increases totalling 5.5 per cent in areas such as the one percent utility and payments in lieu of taxes, licenses, permits and fines and penalties and interest, she is also budgeting for a 7.9 per cent increase in expenses and a 2.6 per cent increase to build reserve funds.
One of the increased expenses is for wages and benefits. McCabe said that she decreased the fringe benefit budget by $213,000 to better reflect expenditures, however there is still a $111,000 cost-of-living wage increase, $148,000 in salary and wage increases that were approved by the previous city council, a balance owed on new positions that were approved in 2018, $122,000 for the provincial employer health tax and a $77,000 to accommodate for operational changes.
The operational changes include increases for snow removal to accommodate for the new traffic circle as well as increases to arena staffing to meet the new Technical Safety B.C. requirements implemented after three city staff died in the Fernie arena due to an ammonia leak in the fall of 2017.
“We need to budget for that,” McCabe said. “We don’t have a choice.”
Another expense that will see property taxes go up is for city equipment costs.
All equipment is owned by the general fund and each city department contributes to that fund. However, previous contribution levels weren’t enough to fully fund the equipment needs, McCabe said. In order to meet those needs, staff increased each departments contribution to the account by five per cent, which equates to a 0.5 per cent increase to property taxes overall.
Part of these costs is the city moving away from lease-to-own agreements, which city staff believe will eventually lead to savings.
McCabe also included a o.3 per cent increase in transit contract expenses to more accurately reflect costs.
The other 2.6 per cent increase is proposed to go towards building the city’s reserve funds.
“Looking at the long term capital plan, this is our second year of doing it, there is a number of things that have come out of the woodwork, and looking at it made me have a bit of an ‘oh dear’ moment,” McCabe said. “I really strongly believe that we need to do a one year bump for this year to bump up the transfers to the general capital reserve and the transportation infrastructure reserve and I would like to do it with a one per cent tax increase which would then all go into the reserve funds.”
This one per cent increase, for the General Capital Reserve and the Transportation Infrastructure Reserve as well as a 0.6 per cent increase for other reserves would be on top of the $3 million already being put into the accounts, which are used to fund capital projects.
Councillor Steven Cross expressed concern over this increase.
“I’m just trying to look for why our residents have to suffer an increase for what’s going into that reserve when there seems to be a lot of money going in there anyway,” he said. “I want someone to justify the math.”
Cody Younker, councillor, also questioned why these increases were listed in the core budget, which is to maintain current service levels, if the funds are for future projects.
But, McCabe said that the upcoming capital projects, that will be funded from the reserves, are not for new facilities but rather maintenance on the current ones.
“The problem is if we don’t fix the arena roof then that asset won’t be use-able anymore,” McCabe said. “If we don’t fix the roads at some point they won’t be use-able anymore, so that is what we are maintaining, the current service levels.”
Allan Chabot, CAO for the city, added that increasing reserves and using the money to pay for infrastructure is intended to move the city away from using loans for those projects and using taxpayer dollars to pay interest.
Council budget deliberations will continue at the next Special Committee of the Whole meeting on Jan. 29 at 3 p.m. in council chambers.
The proposed financial plan includes the core operating budgets from each department as well as their lists of requests that would add new city services. It also outlines the major capital projects planned for the next five years.
Once council has approved the draft budget, which is scheduled for Feb. 26, there will be a public consultation period including a consultation meeting to be held on March 7.
Check back for ongoing coverage of the budget process and deliberations.